2of4Cengage, a textbook publishing giant with offices in San Francisco, has developed MindTap, a digital learning platform. In the company’s reception area, dozens of textbooks prop up a digital receptionist.Photo: Brant Ward / The Chronicle

3of4Illustrations and quotes adorn the walls and blackboards at Cengage including this one Thursday March 5, 2015. Cengage, a textbook giant with offices in San Francisco, Calif., has turned to digital sales with its MindTap, their digital learning platform.Photo: Brant Ward / The Chronicle

4of4Cengage Learning , a textbook publishing giant with a new office complex in Mission Bay has developed MindTap, a digital learning platform to help make up for lost paper textbook sales.Photo: Brant Ward / The Chronicle

Pop quiz: What’s a college student’s biggest expense besides beer?

It’s likely books. An economics textbook can cost a whopping $216. A used copy on Amazon? Still $189 — and all for one semester of course material.

Expensive textbooks are the cherry on top of the mounting cost of college tuition: The average college student spends an estimated $1,200 each year on textbooks and school supplies.

But thrifty students have found ways to avoid paying for books: by renting, scanning or downloading them illegally, leaving the companies that manufacture the books with dwindling profits.

Now a crop of companies is using a combination of digital and other strategies to make up lost revenues in the fragmented market.

Even Chegg, a popular textbook rental company, announced it would offload its physical inventory, setting its sights on “high-growth, high-margin digital services that enable today’s self-directed learners.”

One industry solution has been e-books — digital versions of textbooks, usually offered at a cheaper price. But many of those efforts have fallen flat, as they’re little more than scrollable versions of the paper textbooks they were made to replace, said Phil Hill, a Bay Area ed-tech consultant with MindWires Consulting.

“Even in 2014,” according to a study from the Book Industry Study Group, “when e-books are estimated to represent about half of the adult fiction trade market, digital content in the classroom is still relatively new and not yet incorporated in a uniform way.”

Millennials may be digital natives, but the way forward in education is unclear.

“Textbook publishers built huge cash flows over the years, and they’ve been very reluctant to change them or get rid of them,” Hill said. “We’re in a very messy, unstable area with textbooks right now. We’re not past the print textbook.”

Cengage Learning, the textbook giant formerly known as Thomson Learning, wants to go beyond the flat e-textbook. And it’s turning to the Bay Area to do so.

Following its Chapter 11 bankruptcy restructuring, the company beefed up its Bay Area operations, moved its headquarters to Mission Bay and started hiring employees from tech companies like Zynga.

“When we moved into the city, we were really looking for a sort of different profile for ourselves and also for the kind of people we were hiring. We found that being in the city we’d be able to attract a younger crowd,” said Jim Donohue, Cengage’s chief product officer.

In February, Cengage announced that for the first time, it sold as many digital products as print textbooks, thanks to programs like MindTap, which allows instructors to bring much of their college course — from textbook to assignments — into a customizable digital space.

Now, Cengage “is much closer to a software company than a traditional publisher,” CEO Michael Hansen told Inside Higher Ed.

Donohue acknowledged many students still prefer print textbooks, but “I think the market is transitioning because the user is transitioning,” he said. “I don’t think textbooks are dead, but I think that the evolution away from textbooks is happening because the student is in a digital space, and that’s how they want their content delivered.”

The goal for Donohue is to add enough value, through tools like flashcards, live chats and progress reports, to get students to adapt.

Ventilla is founder and chief executive officer of San Francisco’s AltSchool, a network of schools aimed at personalized learning.

“I think the more you move digitally the more opportunity you have to layer value on top of the underlying content,” Ventilla said. “I’m very interested in (content) that you can remix, where you can take this lesson from here and that lesson from there.”

Textbooks, he says, promote a one-size-fits-all education.

Daniel Kao, a 20-year-old Cupertino native who studies at UC San Diego, said many of his professors simply post course readings online as PDFs. He likes digital textbooks better than traditional ones.

“I've gone mostly paperless with my life, so it’s just a lot easier for me to kind of manage different things, especially in a field like computer science where a lot of it is done — a lot of your work is done — on a computer,” Kao said.

Greta Kaul is a Hearst fellow, covering investment and tech culture on The Chronicle's business desk.

Before coming to San Francisco, Kaul was an intern at the Dallas Morning News, the St. Paul Pioneer Press and the Bozeman Daily Chronicle. She was a staff writer at the Minnesota Daily, the University of Minnesota's student newspaper, where she covered higher education and administration.

She graduated from the University of Minnesota with degrees in journalism and political science.